KBR - NYSE

Good morning, and good afternoon, everyone. Well, thank you for joining us for KBR's Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Drew, and I'll be the operator on the call today. During the call after the prepared remarks, we'll have a Q&A session. [Operator Instructions]. With that, it's my pleasure to hand over to Rachael Goldwait, Head of Investor Relations, to begin. Please go ahead when you're ready.

Stuart and Shad will provide highlights from the quarter and full year and then open the call for your questions. Today's earnings presentation is available on the Investors section of our website at kbr.com. This discussion includes forward-looking statements reflecting KBR's views about future events and their potential impact on performance as outlined on Slide 2. These matters involve risks and uncertainties that could cause actual results to differ materially from these forward-looking statements as discussed in our most recent Form 10-K available on our website. This discussion also includes non-GAAP financial measures that the company believes to be useful metrics for investors. A reconciliation of these non-GAAP measures to the nearest GAAP measure is included at the end of our earnings presentation. I will now turn the call over to Stuart.

Thank you, Rachael, and good morning, everyone. I will pick up on Slide 4. As we always do at KBR, I want to start with a brief

Thanks, Stuart, and thank you to everyone for joining us today. I'm excited to step into the CFO role at an important time for KBR. Microsoft built a strong finance organization and a disciplined foundation, and I'm grateful for his leadership and the opportunity to build on that work. Looking ahead, my focus is straightforward: deliver on our financial commitments, support the financing and investor milestones associated with the Spin and maintain a disciplined financial structure that advances our strategy. With that, let's turn to the fourth quarter results on Slide 11. Revenues were $1.85 billion, down $223 million year-over-year, primarily reflecting award timing in MTS and reductions in EUCOM contingency scope. More importantly, profitability and execution were strong. Adjusted EBITDA increased $12 million and margins were 12.6%, up 190 basis points, driven by disciplined program execution and favorable mix as EUCOM volumes declined from lower-margin work. Adjusted EPS was $0.99, up $0.09 year-over-year, reflecting the stronger adjusted EBITDA performance and lower share count following open market repurchases. Turning to Slide 12 and our full year results. Revenues were approximately $7.8 billion, up modestly year-over-year despite the market volatility. We delivered strong performance in defense and intelligence programs, supported by the LinQuest acquisition, continued momentum in Australia aligned with its defense priorities and sustained demand in STS across our engineering, professional services and technology offerings. Adjusted EBITDA increased $100 million, and full year margins were 12.4%, up more than 100 basis points year-over-year. As Stuart mentioned, this performance reflects prioritizing high-margin growth, disciplined program execution and continued delivery on cost-saving initiatives across the business. Adjusted EPS was $3.93, up $0.60 versus prior year and supported by the increase in adjusted EBITDA and share repurchases, partially offset by higher interest expense and higher income taxes due to international mix in our underlying rate. That same dynamic is reflected in our 2026 ETR guidance, which I'll cover in a moment. Cash was a key highlight. Operating cash flow was $557 million, representing 110% conversion to adjusted net income. We exited the year with strong liquidity heading into 2026. Overall, revenues and adjusted EBITDA within our ranges for the year and adjusted EPS and operating cash flow exceeded the top end of our guided ranges. Turning to Slide 13. I'll focus on a few financial proof points that support the progress Stuart just outlined in Sustainable Tech. As discussed earlier, the market environment shifted materially in 2025. From a financial standpoint, STS offset those headwinds through mix, geographical expansion and increased exposure to OpEx-oriented and structurally stronger demand areas. That operating discipline is clearly showing up in the quality of earnings. Adjusted EBITDA has grown 16% since 2023, outpacing revenue growth and reflecting improved mix and cost execution. While margins were modestly elevated in 2025, we are on pace to meet our long-term margin target of 20% plus in 2027. This performance was delivered alongside strong cash conversion of more than 80% and a trailing 12-month book-to-bill of 1.2, providing good visibility as we enter 2026. Lastly, due to the recurring nature of risk and alignment with our OpEx strategy, we plan to update our adjusted EBITDA calculation beginning in 2026 to reflect our share of unconsolidated JV operating income. Previously, risk and other unconsolidated JVs were reflected through JV net income. This change improves transparency and aligns EBITDA with how we manage the business. Prior periods will not be recast as the impact is not material. Turning to Slide 14. I'll focus on the financial implications of the Mission Tech progress Stuart just outlined. From a financial perspective, the portfolio continues to move towards higher quality of earnings, driven by mix improvements, disciplined program selection and favorable contract structures aligned to the most durable and well-funded national security priorities. Since 2023, the integration of LinQuest, strong international execution and a more selective business development approach have supported mid-single-digit revenue growth while improving margin quality. Importantly, that improvement has been driven by commercial acumen and contract discipline, including a greater focus on fixed price and technically differentiated work, not volume. Even with near-term headwinds from award timing and process activity, the team remained highly selective in bids and recompetes, prioritizing returns and contract terms over scale. That discipline is showing up in sustained margin performance and a robust pipeline. Against that backdrop, the business is preparing for the spend with improving economics, solid visibility and strong alignment to long-term national security demand. Turning to Slide 15. Capital allocation and balance sheet discipline remain key strengths. In 2025, we returned a record $413 million to shareholders through buybacks and dividends, and we ended the year with net leverage of 2.2x. That reflects both strong cash generation and disciplined deployment. Looking ahead to 2026, our priorities remain unchanged. We're committed to maintaining an attractive and stable dividend through the spin transaction. And to that end, our Board approved an annual dividend of $0.66 per share or $0.165 per quarter for 2026. We also continue to invest selectively where returns are compelling. In January, we invested approximately $115 million to fund our proportional share of the SWAT OpEx acquisition with BRIS. A strategic transaction that enhances resilience to CapEx cycles and supports our OpEx expansion. As we execute this investment and absorb typical first quarter cash uses, including incentive payments, leverage may trend up modestly in the first half of the year before coming back down below the targeted 2.5 level as cash builds throughout the year. Ahead of respective Investor Days, which we plan to conduct before the spin, each segment will assess its capital deployment priorities based on its stand-alone profile. I'll now turn to Slide 16 and our fiscal 2026 guidance. We're providing full year outlook for a consolidated company to establish a clear baseline. The stand-alone outlook to be updated as we progress towards the planned spin in the second half of 2026. With that in mind, for fiscal 2026, we are guiding revenues in the range of $7.9 billion to $8.36 billion, adjusted EBITDA of $980 million to $1.04 billion, adjusted EPS of $3.87 to $4.22 and adjusted operating cash flow of $560 million to $600 million. At the midpoint, this implies approximately 4% year-over-year growth across all key metrics. We expect transition costs related to the spin to be approximately $140 million to $180 million, inclusive of onetime IT capital costs. To ensure transparency around ongoing performance, we will introduce an adjusted operating cash flow and an adjusted free cash flow metric in 2026 that add back spin-related cash outflows, allowing investors to better assess the core cash-generating capability of the business. From a modeling perspective, the guide assumes low double-digit growth in STS at our normative long-term margins of 20% plus. MTS is expected to grow at low single digits, also at a normative margin of 10% plus, which we expect to continue to improve over time. Capital expenditures are expected to be in the range of $40 million to $50 million for the year. Our projected effective tax rate is 26% to 28%, higher than the current year, and as I mentioned earlier, primarily reflecting a greater mix of work in the Global South. Estimated adjusted share count was 127 million, which is exactly where we exited 2025. We expect revenues and adjusted EPS to be weighted approximately 46% to the first half and 54% to the second half of the year. For modeling purposes, we expect Q1 '26 to be largely in line with Q4 '25. And on a recast basis, we anticipate moderate sequential growth in MTS as EUCOM is at its base activity levels and partially offset by seasonal sequential declines in FTS. As a reminder, we will be comping against elevated EUCOM contingency in the first 2 quarters of '26, which is roughly $60 million to $70 million per quarter. Our guidance includes key assumptions that are worth highlighting given the current political and economic environment. First, we assume the resolution of outstanding protests in the first half of the year. With award cadence in Mission Tech improving as the year progresses. Second, we assume that all material programs we currently support remain in place. Should that change materially, we will, of course, update as appropriate. Third, we assume modest improvement in interest rates in the second half of the year and stable foreign exchange rates relative to current levels. In closing, our 2026 guidance reflects a disciplined view of the current environment. We entered the year with solid work under contract, strong growth momentum and a highly committed global team. And with that, I'll turn it back to Stuart.

Thanks, Shad. I'm on Slide 17 with some key takeaways, and I'll close with 4 key messages. First, we executed with discipline in a challenging environment. Despite pressure across awards and funding, we delivered results in line with our updated guidance. We expanded margins and generated strong cash and returned that cash at record levels to shareholders. That performance under pressure reflects the strength of our operating model and the quality of the people inside KBR, our teams. Second, both segments exit 2025 with improving momentum and of course, visibility. In Sustainable Tech, the portfolio is better aligned to structurally stronger demand, while in Mission Tech, margin discipline, pipeline strength and funding visibility position the business well as award cadence improves into 2026. Third, the quality and the durability of our earnings continues to improve. Across the portfolio, we are being more selective. We're continually moving upmarket and leaning into innovation and digital differentiation. That focus is really driving better mix, more resilient margins and stronger cash generation over time. And finally, our spin-off prep is advancing as planned. We are making steady progress on separation readiness, capital structure planning and leadership and operational clarity, all with the goal of creating two focused, well-positioned stand-alone companies and, of course, delivering long-term value for our shareholders. With that, I'll turn it over to the operator who will open the call for Q&A. Thank you.

[Operator Instructions] Our first question today comes from Tobey Sommer from Truist.

I was wondering if you could describe to us what the pipeline in STS is for sizable projects with Plaquemines closing out probably next year. Just to give us a sense for how we may be able to fill that hole and even grow.

Thanks, Tobey. Not an unexpected question. In terms of the book-to-bill in Q3 and Q4, I think you've seen the performance has been impressive across the spectrum. That includes technology and obviously, the broader capability set in the Middle East, and that's coming through and particularly in the OpEx area, which we feel is a strategic growth avenue we want to get after due to its -- due to the long-term contract nature of that giving sort of visibility into earnings over time. We've started this year in Q1 very strongly again in bookings in STS. So again, I think directionally, that's a very positive thing to see and obviously to disclose today. In terms of the broader pipeline, it's -- we've got a global business, as you're well aware. We see significant opportunity across the globe and across our capability set, and that includes ammonia and technology. It includes the broader technology set. I talked a little bit about Mura in my prepared remarks also. They are now running well. They've come through the 72-hour test products on spec and have actually sold that product already. So we'll see that ramp up through the course, and they've got a number of projects in their pipeline as well, which both as an investor and executor and technology provider, we will take advantage of. In the broader LNG area, which is one aspect of our business, it's not their business. I would say that we've got obviously work going on in Abadi. We've got Coastal Bend front-end design also ongoing. And we've got a number of others that we can't tell you about today, unfortunately, that we're looking at as we move through this year. I think the other key takeaway here is that many have looked at the equity and earnings line and seen that really as just Plaquemines coming through. We talked a few quarters ago about the importance we felt BRIS would be delivering in that area over time. They've really sort of outperformed as we headed into the end of this year and have a very strong book-to-bill themselves. And then with the addition of swap, we're obviously more than doubling that EBITDA contribution, which is why we're going to be showing you that more transparently going forward. And that all comes through the equity and earnings line that will start to hopefully get people thinking a little bit differently about the quality of earnings and the longevity of that earnings coming through the equity and earnings line. So hopefully, that gives you a rounded view of that.

It does. If I may ask my follow-up on the MTS side, backlog and options growth pretty substantial in the mid-teens and as well as the sizable awaiting award category. Maybe you could give us some color as to the drivers of the 15% growth in backlog as well as the more exciting areas where you've got bids awaiting award.

Yes. Thanks, Tobey. Obviously, we've announced a number of wins. We talked a little bit about HHPC and Tubuti, which come through with a number of year options in them, which helps in that arena. And more recently and very excitingly, the sort of Space Force and Air Force awards in the sort of higher-end digital area, starting to see some momentum around that. But just the broad portfolio internationally has been terrific as you -- as we talked about again in the prepared remarks. So that's really the story coming into the end of this year. As we look out into next year, obviously, we've got the work that's under protest. And I know Shad talked about that in his prepared remarks. And that's quite exciting because it takes us to new customers as well in terms of broadening our reach. And really, the work we're doing in missile defense, the work we're doing with Space Force, et cetera. And obviously, the award of the SHIELD, IDIQ really position us well for workflows under the sort of Golden Dome program also. And we're really seeing tangible wins in that arena as we've press released already. So that sets us up nicely for the future. But I am also excited about what's happening internationally, and it's a piece of our business that everyone sort of doesn't really talk about enough with Australia growing significantly, continually moving up market with an enormous backlog given its successful wins last year and really the U.K. as well with increased defense spending happening across not just in the U.K., but the broader Europe arena. Really positions us well going into '26 and actually well beyond, of course. So I think that's, again, gives you a sort of overall picture. We're very excited about the defense and intel portfolio in the U.S. The work on the protest is a lot of that in the R&S segment, of course. And then we obviously have the international portfolio that's performing extremely well, and I'll reiterate that better margins just because of its commercial nature.

Our next question comes from Mariana Perez Mora from Bank of America.

So my first question is going to be to STS. And I think we and all the investment community will welcome more clarity on the EBITDA and the contribution from the joint ventures. But like in the meantime, how should we think about Plaquemines for how long it's going to contribute at these levels? And how should we think about Lake Charles or at least like Energy Transfer pausing and canceling that project and the impact to that contribution? And if we think, I don't know, 3 years from now, what are the opportunities you guys have to maintain that level of contribution from joint ventures?

That's a good strategic question, probably one best answered more fulsomely at the Investor Day, Mariana. But ultimately, as we said before, the contribution from Plaquemines will run consistently through all this year and into early next year. The increased focus in what we're doing around this and the addition of SWAT, and we're looking at obviously more organic and inorganic growth in that arena to build out that portfolio. And we'll talk about that more as we get through the rest of the year. And that bit of the business is performing really, really well. And so that will be an increasing part of that equity and earnings contribution, which is why we want to be more transparent around it to give, to give investors more confidence on the continued equity and earnings performance. But also it's on top line growth and top line growth and the associated EBITDA generation coming from that portfolio. And I think the book-to-bill of 1.6, again, really demonstrates the momentum that we're having, particularly in the Global South, but ultimately across the portfolio and really sort of delivering, I guess, confidence of future earnings. And that's why we've -- we're confident on the sort of double-digit growth on the revenue line for STS going forward. So I think, again, more to come on that at Investor Day. We'll get more into sort of the granular details there. But strategically, that's where we're heading.

And my follow-up on MTS you talk about Australia. You have been discussing that for a couple of quarters, how strong it is. And now you talk about the U.K. How is the award environment in the U.K. in general going? Like what is your book-to-bill? How meaningful are the opportunities in the near term? And what are the expectations for growth there?

Yes, good question. '25 was a slow award cadence in the U.K. due to the typical defense reviews and U.S. [ weak ] appropriations and really sort of pointing a pounds in this case to where the spend is going to be. That process is now behind us, and we can see clear spend priorities going into '26, which is why we are feeling pretty good about where we are and where we're positioned in the U.K. Again, more to come, and we'll get more granular in the Investor Day. But I think directionally, you can sense there is -- we've come through what is a flat year in the U.K. And now moving into a growth cycle within our portfolio.

Our next question comes from Ian

Question would also be on MTS. Can you maybe give us the kind of the components of the guidance there? I'd imagine defense and intel will be very nicely up above kind of the guidance. But what should we expect maybe for readiness and sustainment? And any other kind of color you could give us on that?

Yes, quite right. Defense and intel is up, as Shad talked about. Science and Space is down due to pressure on NASA budgets, as you would expect. So that's contained within the guide. And then we've got RNS and the protests that are more aligned to RNS as we look through the course of the year. So assuming that they are successful, we will grow RNS nicely as well as the international portfolio we talked about. And it's also worth saying that -- but as I said in my prepared remarks, we did lose some of our recompetes, which were at the lower end of our margin performance. But in terms of the guide, although many -- well, not many, some of them are under protest, a couple of them are under protest. We have not assumed that we will be successful in those protests in the guide. So we've taken a fairly firm view that if we were successful, that would be upside.

Okay. And then you made a comment about doing M&A. How should we think about that? Is this something that's going to wait until after the spin, pre-spin? I don't want to jump the gun on the Investor Day, but how do you think about separating these businesses? Is it going to be 100% you thinking 80%? Just to get our arms around how you're thinking about capital allocation pre and then also post spin.

Yes. No, thanks. So our statements that we made when we announced the spin still hold. In terms of the leverage, the net leverage we're expecting to come out of those businesses is circa 2 on STS and circa 3 on MTS, which is well within market norms. We might be a little bit north or south of that, but we're not going to be far away. So those are good numbers to work from today. In terms of we've got some firepower, of course, as we go through the year to achieve those leverages. And if we find accretive M&A, we don't want to stand still. And I think we've proven that with the acquisition of SWAT to really advance our strategy in the sort of long recurring cycle of OpEx type contracts, and we'll be looking to expand in areas of strategic importance. So -- but we won't get out over our skis. We won't really sort of -- unless there's some significant transformational thing in the middle of a spin, which will be highly unusual. But ultimately, these will be fairly modest but accretive and strategic acquisitions. We don't want to stand still in this period as we've proven through the SWAT acquisition, which is a highly accretive deal for us.

Yes. And maybe just to build on that, Ian, on deployment, the year typically begins, as you know, with several funded and cash commitments around annual incentive and dividends. And this year, we'll also be incurring some spin-related transition costs as well. And so when you combine those with the strategic investment that Stuart said at the outset, with the normal capital expenditures, they effectively consume a lot of the free cash flow in the first part of the year. So as the year progresses, we'll, of course, continue to assess opportunities to deploy any excess cash, obviously, in the most effective manner in close consultation with our Board. But our focus really is, as we said all along, is making sure we're setting both of these businesses up with really strong balance sheets out of the gate.

Our next question comes from Jerry Revich from Wells Fargo.

This is Kevin Uherek on for Jerry. Just had a question on SCS. Would it be possible if you could rank order the growth outlook by end market in 2026?

I think that really is one for Investor Day. Where we've got -- we've said this before, several avenues of growth. We're expanding our footprint in Iraq. We announced major wins there recently. We're expanding our footprint in Saudi Arabia across -- and both in different areas of the market. Of course, we picked up the Coastal Bend LNG feed and awarded front-end design in LNG. Technology continues to perform. It's difficult to give you a point estimate in that right now because of just the timing. But I would say that the way the portfolio performs, that double-digit growth is the way to think about it at the consolidated level. And we'll be obviously, as a stand-alone STS business, we'll be digging into this in more detail when we get to Investor Day.

Got it. Understood. And then on the Mission Solutions piece on EUCOM cadence, does fourth quarter represent the run rate in activity? Or should we expect a step down in 1Q?

Yes, Kevin, it does. And so I'll just remind you though that the first and second quarters of '26 have a bit of a tough comp, $60 million to $70 million of what I'll call elevated levels as that then threw down and is now at its steady run rate coming into '26.

Our next question comes from Adam Bubes from Goldman Sachs.

In MTS, margins for the full year 2025, I think, were 10.4%. And it sounds like mix is improving there. So can you just expand on the puts and takes on the margin outlook for MTS embedded in the 2026 guide?

Yes. So happy to take that, Adam. Despite some of the macro headwinds that Stuart pointed out, I think operational performance throughout '25 is really strong. And as you said, resulted in a 10.4% margin, which again is in line with our long-term expectations for this business and really, I think, reflective of the profit first business development mindset within that organization. While we do hope to improve margins over time as we continue to see mix of that business move towards more fixed price work, we've not assumed any uplift in '26. And so it's flat sequentially from the 2025 run rates.

Got it. Understood. And then you've talked a little bit about today increasing mix of recurring OpEx and digital solutions. Is there any way to contextualize what percent of revenues today is OpEx driven and where you think that can head over time?

So again, I think we -- obviously more an Investor Day there. Sorry, I keep saying that, but obviously, that's firmly on our minds. But that's part of the reason we are sort of showing more transparency around that OpEx business in BRIS. We do have an OpEx-facing business that we own 100% in the international arena, and we'll bring that all together when we meet later in the year for that Investor Day to show you just the opportunity there. We'll describe some of the long-term nature of those contracts. We'll give you an overall margin profile of that particular area. It's certainly within a range and what the outlook is. But we're excited about that strategically. We do think that assets across the world, of course, have increased significantly over this last decade. But the level of digital solutioning and thinking through how you can help your customer keep the plant up or make it more efficient and do predictive and analytics that support that is exciting, and we're right in the middle of all that. So I do think it's -- as assets age, there's going to be more volume of business in this area. And obviously, it's -- the demand is increasing, and we feel we're very well placed over time to take advantage of that. And I think for investors, I think the strategic upside of that is that the contracts are longer term in nature. There's greater visibility of earnings and cash across that book of business. So that's directionally where we're heading, but more to come again in Investor Day.

Our next question comes from the line of Sangita Jain from KeyBanc Capital Markets.

If I can ask 2 questions on MPS. My first one is, are you still exploring a sale of that segment? Can you speak to the process if you are? And is that still an option as you move towards the split?

I mean, you know I can't answer that question. So it's -- I mean we are committed to shareholder value. We've said that many times, it's 100% the truth. We're going through this spin process to prove that out and demonstrate that. We're open to approaches. We're open to anything that will enhance shareholder value. That's all I can really say at this point.

Understood. And then on the MPS awards in protest, can you provide a little more detail on how many awards you're protesting and if any of them are outsized versus the others and also the timing that you're anticipating of those resolutions?

Yes, these are fairly in the public domain. The Mission Iraq award is circa $1 billion, and that's with the State Department. Then we have a classified program called K2A that's in the similar

Our final question comes from Andrew Kaplowitz from Citigroup.

Stuart, can you talk a little bit more maybe about impacts of AI on KBR? I think you mentioned it briefly in prepared remarks, but how do we think about the mix between software and services and MTS? I mean you mentioned digital and sort of the growth there. I think there's quite a few security and regulatory barriers that should protect your business versus AI. But maybe you could elaborate on how you think about AI's impact on KBR's businesses.

Yes. We talked a little bit about this before, I think, in last quarter that I think there's a number of companies that created AI departments, et cetera. And I think they probably spend a lot of money with not a lot of gain. We've been very disciplined around how we approach this, and we very much look at use case solutions that actually drive an ROI. We've got a number of activities inside MTS that are funded by government, as you would expect, as we look at that from an R&D perspective, and that hangs off the back of our digital engineering labs that we press released recently and talked a little bit about in the prepared remarks, which are gaining good traction because of the speed to market of R&D projects, et cetera, as you would expect. More in the STS world, again, looking very strongly at use cases around accelerating engineering, making sure there's checks and balances within that engineering that avoid human errors, speed up progress. But at the same time, looking at how we operate facilities across the world or our customers operate facilities and using particularly digital twins and applying AI and machine learning to really sort of draw data and get trending over time to know what good looks like and make sure that operators can intercede at the appropriate time or the maintenance crews can intercede at the appropriate time. So it's a multifaceted approach, but ultimately, it's driven by use case ROI, and we put quite a bit of front-end effort into that, Andy, rather than just saying AI is good and just running at it. We've been quite disciplined. And that's on the front of office. I think in the back of office, increasing use of bots to drive efficiency and decrease human error, keep our SG&A in check or reduce it in fact, over time. We're rolling out Microsoft Dynamics across the STS portfolio, which is really the forefront of a digitalized ERP because our project controls, which gives us all the project data hangs off that, and we can look at things real time and start to make real-time decisions on commercial execution. And we've also got digital procurement hanging off the back of that and with a similar upside. And so I think that whole digital project execution philosophy underpinned by really a very modern and digitally enabled ERP is going to stand us in really good stead as we come out of the spin. So I think it's multifaceted this front of office driven by use case, the back of office, again, driven by use case, but obviously with different drivers.

And Stuart, you just mentioned it, but like when I looked at the release for STS margin, it mentioned ERP. And so we always think about sort of ERP implementation as, I guess, a risk factor, but you got to over 20% margins again for '26. So how do you think about STS margins? Are they kind of going to be consistent here over the next few quarters? And do we expect improvement in '26 versus '25?

Yes. Quite right on the ERP. It's typically a risk. Our teams have done a fantastic job. We've rolled out Dynamics just to be fully transparent, we did a pilot in Singapore. It went well. We rolled it out in Australia, added more functionality, went back to Singapore, increased their functionality, rolled it out in India, rolled it out in the U.K. And now we're looking at how we roll corporate out in the U.S. and then we'll move to the Middle East. So I think we've proven that we can roll this out without blowing it out, which is always the risk. So hats off to our teams in sort of managing the execution and the implementation. In terms of margins across STS, I think we'll just stick with our statement that it's 20-plus percent across the portfolio. And as you've seen, we have done as we are prudent in how we account for things. And as we close out projects, you will get ups in certain months. But I think over the piece, the portfolio performance is 20-plus percent. And I think that's a good measure to stick with.

Thank you. With that, we have no further questions in the queue. So I'll hand back over to Stuart Bradie for some closing remarks.

Thank you. Thank you very much. So just a few final thoughts. I think as we discussed on the call, 2025 started off as challenging a year as we've seen in many. But I think it really underscored the strength of the KBR portfolio. Our geographical reach being truly global and understanding each of the countries and the different drivers is a real plus, a very diversified customer base. And that really drove a lot of a true lack of concentration risk and being agile, both in terms of how we do a business and our business model that gives both Mission Tech and Sustainable Tech real resilience. And I think that came through in the -- particularly in the bottom line and the cash performance through the course of the year. So despite external noise, we did execute on our strategy, and we did so with discipline. And that's really about our people. The quality of our people and the commitment of our people is unbelievable, and my hats off to them. And so while we face revenue headwinds, margins did expand, cash was strong and that really, really reinforces the underlying health of the broader portfolio. So as we enter '26, we've got a solid foundation in both businesses, strong work under contract and as we discussed on the call, a strong pipeline. So I think we're really well positioned in both businesses as we head towards the spin and as we enter 2026. So thank you again for joining today's call. I would welcome Shad and Rachael officially to the team in this forum. And obviously, we'll be talking soon. So thank you very much.